Kabul's Tax Levies Raise Flags From U.S. Watchdog

WASHINGTON—Afghanistan's cash-strapped government has levied nearly $1 billion in taxes and fees on U.S.-funded reconstruction projects and military contracts over the past five years, often in violation of bilateral agreements with Washington, according to a new audit by a U.S. government watchdog.

Since 2008, the Afghan Ministry of Finance has assessed over $921 million in business taxes and associated penalties on 43 contractors that receive U.S. taxpayer dollars to build roads, schools and health clinics in Afghanistan...